Climate change poses an enormous threat to our economy and quality of life, and readily available solutions are not being implemented fast enough to head off the worst damage. That’s why the National Whistleblower Center (NWC) launched our Climate Corruption Campaign in January 2020.
The Climate Corruption Campaign is the first sustained effort to educate potential whistleblowers in the fossil fuel and industrial logging industries about their rights under whistleblower laws, including the right to keep their identities confidential. It aids whistleblowers in securing qualified attorneys, participating in high-impact prosecutions and winning financial rewards when those prosecutions are successful. The campaign also works in the policy arena to strengthen whistleblower rights.
NWC gives particular focus to assisting company insiders with evidence of potential fraudulent concealment of industry pollution risks, including risks to financial assets.
There are five key facets to our approach:
- We’re educating whistleblowers on how to come forward with allegations confidentially and which laws protect them.
- Partnering with the National Whistleblower Legal Defense and Education Fund, the NWC assists whistleblowers in obtaining competent whistleblower attorneys. These attorneys assist whistleblowers in filing allegations of crimes with the appropriate law enforcement agency.
- We’re helping whistleblowers protect themselves by educating them about how to keep their identities confidential, guard against retaliation, and secure rewards when they help the government produce monetary sanctions against wrongdoers.
- We’re encouraging other whistleblowers to step forward by publicizing these protections and rewards.
- We’re defending and strengthening laws and agency rules that are needed to protect and reward whistleblowers who help expose climate-related corruption.
Helping whistleblowers navigate is NWC’s Chief Counsel Sharon Eubanks, a corruption expert who served as lead counsel in the largest-ever civil RICO enforcement case, U.S. v. Philip Morris USA. Eubanks recently testified before Congress on the linkages between the organized deception campaigns of the tobacco and fossil fuel industries.
What Exactly is a Climate Change Whistleblower?
A climate change whistleblower is a person who discloses information about violations of law, gross mismanagement of funds, abuse of authority or other wrongdoing that exacerbates climate change. As with all other whistleblowers, climate change whistleblowers possess information about wrongdoing not generally known by the public and disclose this information (typically to a government official, journalist or employer) for the purpose of rectifying the wrongdoing.
In the case of climate change whistleblowers, rectifying the wrongdoing could include reducing threats to the economy and global financial stability posed by climate change risks as well as abating further damage to the environment and public health.
The two industry sectors that contribute the most to climate change are fossil fuels and industrial logging. NWC encourages those with information about improper concealment of climate change-related risks in these industries and others to consider serving as protected whistleblowers under the U.S. Dodd-Frank Act. Climate change whistleblowers may also have rights under the Foreign Corrupt Practices Act, Internal Revenue Code, False Claims Act, or Lacey Act. Securing protection and eligibility for financial rewards under these laws does not require U.S. citizenship, and the laws are often enforced against non-U.S. companies doing business or selling shares in the U.S.
How We’re Defining These Industries
What is the fossil fuel industry?
The burning of fossil fuels such as oil, natural gas, and coal is the largest contributor to greenhouse gas emissions, which hold heat in the atmosphere and warm the plant. The fossil fuel industry includes companies whose primary business is the extraction, refinement, processing, distribution, or sale of oil, natural gas, or coal. The processing of oil and gas also includes the production of feedstocks to produce petrochemicals and plastic.
In addition to oil, gas and coal companies, companies that provide crucial support to the fossil fuel industry include banks that finance fossil fuel development, auditing and accounting firms that prepare and verify financial statements and tax filings, and trade associations that represent these companies.
What is the timber industry?
The global timber industry includes companies that commercially log, process, or trade timber. Currently, unsustainable practices in the global timber industry are a major driver of deforestation, particularly in tropical forests. Deforestation is a key contributor to climate change.
In addition to these companies, companies that provide crucial support to the timber industry include auditors who provide sustainability certification services and auditing and accounting companies that prepare and verify financial statements and tax filings.
What is Climate Risk Disclosure?
In the past several years, U.S. states, cities, counties and individuals concerned about climate change have filed important lawsuits against fossil fuel companies, asserting that the companies are responsible for climate-related damage due to their carbon pollution. These cases confront “what might be the greatest scam in history,” in the words of historian Naomi Oreskes: the massive disinformation campaign designed to stall action on climate change by persuading decision makers and the public that it is not a problem to be taken seriously.
However, the National Whistleblower Center is primarily concerned with a related deception that, with a small handful of notable exceptions, is unaddressed in the climate change lawsuits filed to date: the dramatic understatement of risks posed by climate change to fossil fuel and timber companies’ own financial condition and to the economy at large, or simply put: climate risk disclosure.
Climate risk disclosure refers to corporate disclosures of critical information about exposure to climate change-related risks. Climate change presents two main categories of risk to financial assets: transition risks and physical risks. “Transition risk” refers to risks of losses due to changes in law, policy, technology and markets related to the transition to a low-carbon economy. “Physical risk” refers to risks of losses arising from rising seas, intensified heat, droughts, floods, storms, and wildfires, and other physical impacts of climate change.
In terms of legal requirements for climate risk disclosures, requirements vary between countries and industry sectors. In the United States, federal securities laws require that publicly traded companies disclose risks that are “material” to shareholders, but these companies are given very little guidance on how to apply this requirement to climate risks. Privately held companies have virtually no disclosure obligations. Until very recently, climate risk disclosure by companies around the world have been governed by voluntary regime created by the Task Force on Climate-Related Financial Disclosures.
However, investors and other stakeholders around the world have increasingly demanded mandatory frameworks and governments are beginning to respond. In September 2020, New Zealand announced the first-ever mandatory framework, requiring that asset managers and financial institutions disclose their climate risks. In November 2020, the United Kingdom announced a disclosure requirement for financial institutions and large companies.